One day up, one day down. If you can spot a trend, give yourself a pat on the back.

Prices at the retail level increased in April
at the fast pace in more than 3 years. The CPI, or consumer price
index, rose a seasonally adjusted 0.4% last month. Americans paid more
for medical care, food, recreation, tobacco, motor vehicle insurance,
airline fares and grooming. Much of the recent increase has been driven
by higher oil prices.

A spike in gas pushed the energy index up by 3.4%
in April. Food prices also rose 0.2% last month, though the cost of
groceries has fallen in the past year. Stripping out food and energy,
so-called core consumer prices rose 0.2% in April. The CPI has risen
just 1.1% in the past 12 months. The core CPI increased 2.1% in the 12
months ending in April.

So, we really are pretty close to the Fed’s target of 2%, depending
on which numbers you, or the Fed, consider important. And so several Fed
officials have been talking up the idea of a June rate hike, which just
kills the mood on an otherwise beautiful Tuesday. Atlanta Fed
President Dennis Lockhart and San Francisco Fed President John Williams
said the Fed’s decision on whether to hike rates at the June FOMC
meeting depends on the data, but June is “certainly” on the table.

The
Fed has said that the effect of low oil prices was “transitory” and with
a big jump in the CPI last month, it looks like we are seeing the
transition. This means expectations for a rate hike are now being pulled
forward, which probably means weaker markets. Tomorrow, we get the
minutes from the April FOMC meeting. If the policymakers are strategic,
they will have been clever enough to have included a serious debate
about hiking rates in June.

Construction on new houses
rebounded in April after a sharp dip in the prior month. Housing starts
climbed 6.6% last month to an annual pace of 1.17 million. Construction
on apartments, condos and other buildings with at least five units
surged 10.7%. Single-family home starts advanced a smaller 3.3%. Permits
are running 5.3% below year-ago levels.

Industrial production grew 0.7% in April
– the fastest monthly rate in 17 months, bouncing back after two
straight monthly declines as auto production rebounded and cooler
temperatures boosted utility output. This was only the second increase
in industrial production in eight months. Compared to a year ago,
production was down 1.1%.

US companies stepped up big to
support their own shares at the start of the year, making the first
quarter potentially one of the best ever for share buybacks. Based on
preliminary data, share repurchases are 20 per cent higher in the first
three months of the year versus the fourth quarter and 31 per cent above
the year-ago period. Among the biggest buyers of their own shares were
Apple, General Electric, McDonald’s and Boeing, while ExxonMobil has
significantly cut back on its share repurchases after falling oil prices
have hit the energy industry.

Companies have been big buyers of their own stock for the past few
years, helping to boost earnings per share as revenue growth has
shriveled. Activist investors pushed for better returns; over the
long-term you improve returns by re-investing in the business, improving
innovation and productivity; the quick fix is to buy back shares.

Coming into 2016, rising rates were expected to curtail share
repurchases as it would become more expensive to borrow to fund them,
and better uses would be found for cash. However, the downturn in the
market and expectations for fewer rate rises combined to create a nice
scenario for buybacks. The question is, how long can this continue? For
the past 7 years, the market has been propped up with easy money from
the Fed, the market has grown dependent on finance as an engine of
growth, or finance as the illusion of growth.

The IMF is pressing the Eurozone to
let Greece skip paying interest or principal on bailout loans until
2040. The IMF is also pressing for Greece’s interest rate on its
Eurozone loans to be fixed for 30 to 40 years at its current average
level of 1.5%, with all interest payments postponed until loans start
falling due. Eurozone governments, led by Germany, are reluctant to make
such major concessions on their loans to Athens, which currently total
over €200-billion-euro, but they also want the IMF to rejoin the bailout
as a lender to boost the program’s credibility.

A compromise between
Germany and the IMF is needed by June, when Greece is in danger of
running out of money to pay its bills, and definitely by July, when
major debts fall due. This is all happening as the UK considers a
referendum to exit the Euro Union.

Greece is entering the seventh year of its troubled bailout still
struggling to begin a recovery. The country has largely closed the
gaping budget deficit that triggered its debt crisis. But the
IMF-European bailout—including austerity measures that in total have
amounted to more than 30% of GDP so far—contributed to a 25% decline in
the country’s economic output since before the debt crisis.

Portions of Hong Kong have
been shut down as part of a drastic security increase as the city
prepares for a rare visit by National People’s Congress Chairman Zhang
Dejiang. He will be the first senior Chinese official to come to Hong
Kong since the 2014 Occupy pro-democracy demonstrations which shut down
the territory’s financial hub for months. Zhang is scheduled to speak at
an economic conference, but will also meet with a small group of
pro-democracy legislators' tomorrow evening.

Warren Buffett
has several rules for investing. The first rule is don’t lose money.
The second rule is don’t forget the first rule. Also, Warren Buffett
does not bid in auctions. Warren Buffett does not invest in
technology. More like guidelines than hard and fast rules. Buffett
announced a nearly $1 billion stake in Apple, and he’s already lost
about a $100-million (give or take); he also announced he’s financing a
bid for Yahoo!’s internet assets as part of a group along with Quicken
Loans founder Dan Gilbert. Refer back to Rule number one.

Jack Dorsey is making it easier for
Twitter users to stick more stuff in their tweets. Not by dropping the
service’s famous 140-character limit – an idea the company had
previously floated – but by expanding it, in a way: Twitter won’t count
the characters used to insert photos, links or other media into tweets.
The change could happen in the next two weeks.

LendingClub,
which plunged 51 percent last week with the surprise departure of its
leader and disclosure of faulty internal controls, dropped again this
morning following a regulatory filing from the company that said
strategies to restore investor confidence and obtain new capital for
loans might include equity or debt sales, fee changes or other moves
that could be “costly or dilutive” to shareholders. Lending Club has
received a subpoena from the DOJ, and says it “intends to cooperate”
with the department.

Phone book publisher Dex Media has
filed for bankruptcy protection after reaching a restructuring deal
with creditors. The Chapter 11 announcement marks the fifth time in
seven years the firm or its predecessors have found themselves in a
bankruptcy court as yellow-pages companies struggle with the move of
advertisers and consumers to the Internet.

Picture an 18-wheel truck
barreling down the highway with 80,000 pounds of cargo and no one but a
robot at the wheel. A team of former Alphabet executives is launching a
start-up called Otto, O-T-T-O, focused on self-driving trucks, in an
attempt to improve driverless technologies in the long-haul trucking
industry. Otto plans to sell kits to retrofit existing trucks with
autonomous platforms, but has not disclosed when they will go on sale.
The technology will only work on highways for now, with human drivers
required off-highway, potentially allowing the vehicles to travel much
greater distances.

The Supreme Court
has rejected Exxon Mobil Corp’s appeal of a $236 million judgment
against the oil company in a case brought by the state of New Hampshire
over groundwater contamination linked to a gasoline additive. The
justices left in place the New Hampshire Supreme Court’s 2015 ruling
upholding the judgment by a jury that in 2013 rejected Exxon’s claims
that the contamination linked to its fuel additive was not its fault but
rather the fault of the local gas stations and storage facilities that
spilled it.

Exxon argued in its appeal that its due process rights were violated
because New Hampshire had not proved the company’s liability for the
alleged pollution at each individual site. The additive at the center of
the case is called methyl tertiary butyl ether, or MTBE. It is an
oxygen-containing substance that was added to gasoline to promote more
complete combustion and reduce air pollution. It was one of several
additives that had been recommended by regulators to reduce emissions
but has now largely been phased out of the U.S. fuel supply because of
the hazard it poses to groundwater. New Hampshire officials called the
$236 million judgment the largest MTBE-related verdict since states and
other agencies began making claims for remediation and other damages.

The court agreed to hear exactly zero new cases, continuing to set a
sparse stage for its next term, which may see the lightest caseload in
its already-light recent history. So far, only 12 cases are on the
court’s docket for the October 2016 term, which runs through June 2017.
The most likely reason for the slowdown is that there are now just 8
justices (split 4-4) and the court is reluctant to take on an issue in
which it might not be able to provide a clear answer.

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